Help to Buy Scheme 2021- 2023 - Mortgage Squared

Help To Buy Scheme

 

Mortgage Squared would like to remind you that the new Homes England Help to Buy Equity loan Scheme will commence on the 16th December 2020.

What is the Help to Buy scheme?

If you’re a first-time buyer in England, you can apply for a Help to Buy: Equity Loan.

A min of 5% and up to max of 20% (40% in London) of the full purchase price of a new-build can be borrowed. The scheme only works if you buy your home from a homebuilder that is registered for Help to Buy – Equity Loan.

The amount you will pay depends on whereabouts in England you live.

Help to Buy: Equity Loan price caps – April 2021 to March 2023

Region Maximum property
price
North East £186,100
North West £224,400
Yorkshire and
the Humber
£228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000
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The total cost of buying your newly built home will be covered by the equity loan, the deposit you have saved up and your repayment mortgage.

The market value of your home will determine the percentage you borrow.

You will not pay interest on the equity loan for the first 5 years of borrowing. You will begin to pay interest in year 6 on the loan amount you borrowed.

The equity loan payments are interest only, so you do not reduce the amount you owe.

You can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.

READ  What is Help to buy equity loan!

Example: for a home with a £200,000 price tag

75% mortgage = £150k, government 20% loan = £40k, buyer's 5% deposit = £10k

Paying back the equity loan

When deciding if an equity loan is right for you, it’s important to consider the full cost of your borrowing:

For the first five 5 years:

  • the equity loan is interest free
  • you pay a £1 monthly management fee by Direct Debit

 From year 6:

  • pay the £1 monthly management fee
  • pay monthly interest fee of 1.75% of the equity loan
  • interest rate will rise each year in April by the Consumer Price Index (CPI), plus 2%
  • continue to pay interest until you repay your loan in full

When you take out your equity loan, you agree to repay it in full, plus interest and management fees.

You must repay your equity loan in full:

  • at the end of the equity loan term
  • when you pay off your repayment mortgage
  • when you sell your home
  • if you do not follow the terms set out in the equity loan contract and we ask you to repay the loan in full
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The amount you pay back is worked out as a percentage of the market value at the time you choose to repay.

If the market value of your home rises, so does the amount you owe on your equity loan. And if the value of your home falls, the amount you owe on your equity loan falls too.

For eligibility, how to apply and further guidance please go to

https://www.helptobuy.gov.uk/equity-loan/eligibility/

If you would like to chat further about your mortgage requirements then give us a call on 08081 551 807 or visit our website http://www.mortgagesquared.co.uk

 

 

 

 

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